John Paczkowski

Recent Posts by John Paczkowski

Apple Is Killing It in China, and Cook Says That’s Just the Start

Great-Wall-of-iPhones-380x285-featureInvestors found a lot with which to be disappointed in Apple’s first quarterthe fourth-most profitable quarter of any company ever. Record-breaking revenue. Record-breaking profit. Record-breaking iOS device sales. Average weekly revenue that rose to $4.2 billion from $3.3 billion in the year-ago quarter.

But amid that parade of, ahem, letdowns that savaged more than 10 percent from Apple’s share price in after-hours trading Wednesday, was some good news about the company’s performance in Greater China, a region that is becoming increasingly important to the company’s growth — a region so important that Apple has made it a new operating segment.

Apple’s sales in Greater China for the quarter rose to $6.83 billion from $4.08 billion a year earlier. And that’s with the new iPads shipping late in the quarter. Meanwhile, iPhone sales in the region more than doubled. And that’s without China Mobile, the country’s biggest mobile operator, which doesn’t yet sell the iPhone.

“If you look at Greater China … our revenues were $7.3 billion in the quarter,” Apple CEO Tim Cook said during the company’s earnings call. “That’s incredibly high. It’s up over 60 percent, year on year. And that’s comparing a quarter with 13 weeks to one with 14 weeks. So the underlying growth is higher than that. We saw exceptional growth in iPhones into the triple digits. … [And we] saw very nice growth with iPad.”

So Apple is still on a tear in China. And, according to Cook, it’s only just getting started. Over the past year, it has increased the number of its China retail stores to 11 from six, it has doubled the number of premium resellers to more than 400, and it’s selling the iPhone at 17,000 outlets, up from 7,000 a year earlier.

Apple_Q1_2013

“This isn’t nearly what we need, and it’s not the final by any means,” Cook said. “We’re not even close to that. But I feel that we’re making great progress, and I am very happy with how things are going.”

And, as I said earlier, Apple is still in the early stages with China. It hasn’t yet inked an iPhone distribution deal with China Mobile, though it may do so soon. And when it does add the device to China Mobile’s portfolio, it gains access to an additional 707 million subscribers. That’s a massive addressable market, and one certain to fuel the company’s continued growth in China.


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